Health reform headaches

In the final year of the George W. Bush administration, Dr. Jeffrey Rich, a cardiac surgeon from Norfolk, spent his weekends seeing patients and performing surgeries at Sentara Norfolk General Hospital. During the week, however, he served as director of the Center for Medicare Management based in Baltimore County, Md., a part of the federal Centers for Medicare &Medicaid Services.

Immersion in that massive federal agency, which manages the Medicare and Medicaid programs, gave him a close look at how complicated the problem of delivering health care is. Even so, he’s still stumped when it comes to finding a cure. Figuring out a way to cover more people and improve care while also spending less is “like grabbing a balloon,” he says. “You squeeze on one side and the other pops out.”

There’s a lot of that going on these days. President Obama and his allies in Congress are pushing hard for changes in health care, in hopes of covering the estimated 46 million Americans without health insurance (including more than 1.1 million in Virginia) while also curbing runaway costs. Big changes could be coming. The possibilities include a government-run health plan and a mandate requiring everyone to have health insurance.

Obama has been traveling the country to drum up support for his proposals, including a stop in Bristol in late July. There he told a crowd that the current health-care system “works well for the insurance industry, but it doesn’t always work well for you.” Around the same time, first lady Michelle Obama came to Caroline County for the dedication of a community health center in Bowling Green. At that appearance, she said that without reform, about one in every five dollars spent in the next decade will go toward health care.

By early August some proposals were moving forward in Congress, but what emerges in September is still anyone’s guess. (See bill summaries below.) Members of the Senate Finance Committee, for example, were crafting legislation that would cut about $100 billion from the estimated trillion-dollar cost of the original plan and would replace the government insurance option with cooperatives. The panel also dropped a controversial provision that would allow Medicare to pay doctors for voluntary counseling on end-of-life issues.

After missing its original August deadline to pass health-care legislation, Congress adjourned for a summer recess. Supporters and opponents of the legislation used the recess period to try to sway public opinion: opponents arguing that the Democrats’ plan would cost too much, hurt quality and limit access, and supporters saying that insurance companies already limit access to health care because they want to make a profit.

But where the debate goes depends somewhat on what the lawmakers hear at home. In Virginia, various stakeholders see cause for worry and optimism in the deliberations so far.

Slowing down the process
At the Virginia Chamber of Commerce, the hope is that Washington at least will take its time. Keith Cheatham, the group’s vice president for government affairs, says the White House and congressional leaders have been moving too fast. Business groups opposed to some provisions being tossed around in Congress worry that they will be unable to stop them. “It just looked as though everybody up there was determined to pass a bill before they went on recess,” Cheatham says. “It’s good to have this debate, but people need to slow down and pay attention and look at the issue seriously.”

As the debate continues, the chamber plans to push for the elimination of proposals that it says would unfairly burden businesses. For instance, the Virginia chamber, following the lead of the U.S. Chamber of Commerce, wants to stop any “pay or play” provisions, which would require employers to either offer health insurance to their employees or pay a penalty. “Pay or play is not what anybody in the business community would come up with,” Cheatham says. “I’m not sure that they’re listening to what the national constituency groups are saying.”

One change that likely will survive congressional debate would create a nationwide standard for Medicaid eligibility. That would be especially good for uninsured Virginians because the federal standard would be more generous than the commonwealth’s, says Deborah D. Oswalt, executive director of the Virginia Health Care Foundation.

A modest safety net exists for people who are not eligible for Medicaid, explains Oswalt. About 28 percent are able to get primary care at free clinics or community health centers around the state, which the foundation supports. “That’s good for them, but the other 72 percent end up in hospital emergency rooms. So they’re in bad shape, and it’s much more expensive to treat them there,” she says. “The bottom line is, those of us who are lucky enough to have health insurance end up paying for those who don’t. It’s very inefficient and expensive.”

Expanding Medicaid coverage will cost more tax dollars, but Oswalt argues that it still will have a good effect throughout the health-care industry. “You hear more talk about whether there should be a public insurance product, or who should pay for it. Those are important issues, but [expanding Medicaid] would help Virginia the most.”

Dr. Thelma Bland Watson, executive director of Richmond-based Senior Connections, the Capital Area Agency on Aging, says a major issue for senior citizens in the health reform discussion is expanded Medicare coverage for home care or personal care. These services would allow many seniors to stay in their homes rather than move to assisted-care facilities.

Watson says that issue has been addressed in some of the proposals before Congress. “We’re want to make that it’s not lost in the debate,” she says.

No measurement of outcomes
One tool that is not part of the debate in Washington is creating a method for tracking which medical procedures and treatments are the most effective and how much they cost. Elizabeth Teisberg, a professor at the University of Virginia’s Darden Graduate School of Business Administration, says that measuring the outcome of medical treatment might be tough to do, but it is essential. “One of the most powerful things government could do is to say, ‘You must measure and report outcome.’ They could set that wheel in motion. But we’re not hearing that,” says Teisberg, the co-author of “Redefining Health Care: Creating Value-Based Competition on Results.”

A key reason for this omission, she says, is that it’s tough to get consensus on exactly how to measure outcomes. Teisberg acknowledges it will take time to learn how to do it, but that’s how the best care — and the best use of health-care dollars — will be found. Right now, she says, there’s more focus on whether health-care providers followed the approved procedures rather than the results and the costs.
Teisberg also argues in favor of universal coverage. “We have a system that has tremendous amounts of gaming and cost-shifting” as everyone — hospitals or insurers, for example — tries to push the costs of treating the uninsured on someone else. “We have a chance of stopping it if we bring everyone in,” she says.

Laurens Sartoris, president of the Virginia Hospital & Healthcare Association, says the public might not have an appetite for some of the restrictions that could come with health-care reform. “Americans tend to value innovation, choice and convenience,” he says. Despite its problems, the U.S. system has produced major advances in health-care treatments. Gall bladder surgery, for example, used to mean a lengthy stay in the hospital and a long recuperation. Now it’s a one-night stay for a laparoscopic procedure that leaves little more than a puncture wound. “All that innovation is taking place in the art and practice of medicine, in terms of pharmaceuticals and technologies,” he says.

And then there’s the potential cost. With the federal debt at more than $11 trillion, “it’s a fair policy question to ask whether we can afford to do this at this time,” Sartoris says. “Health care is not in a vacuum. There are other demands on the federal purse.” It’s not as simple as making Medicare the insurer for anyone who wants health coverage, he says. Medicare already falls short of reimbursing health-care providers for their costs, he notes. Expanding the government-paid program without ensuring that the money will be spent efficiently will just push more costs to private payers, he says.

Preserving private insurance
That’s why Dave Bernd, CEO for Norfolk-based Sentara Healthcare, says his organization could support a national goal to achieve universal coverage but wants private insurance companies to have a place. Universal coverage can be achieved, he says, by mandating health insurance coverage for all Americans — just as drivers and homeowners are required to have insurance — and by providing subsidies for the poor. Health insurance should have a mandated guarantee issue, meaning that even people with pre-existing conditions can get coverage without having to be part of a high-risk pool. But that can only work, he says, if young and healthy people without insurance, who are gambling that they won’t get sick, are part of the overall pool.

Last year, nonprofit Sentara had a $120 million surplus, which represents a 3 percent operating margin. That was possible because private insurer reimbursement rates offset below-cost Medicare reimbursement rates and charity care. If Medicare reimbursements had been in effect for everyone — a worry he and other providers have about expanding a government-payer system — the bottom line for last year would have been a $250 million loss. “That’s how much cost-shifting is going on,” he says. “Competition is good, but if health-care reform were to expand the public option by making Medicare available to anyone, with its 30 to 40 percent pricing favorability, it would drive private insurers out of business.”

It may be time to reconsider capitation, Bernd adds, an idea that fizzled in the 1980s because of lack of coordination among health-care providers. With integrated health systems like Sentara’s, the concept might work. Under a capitation plan, providers are paid a set amount of money per month to manage the health of enrollees. So rather than have separate fees for every provider and procedure — a system that rewards inefficiency — a capitation system demands efficiency. “There’s an incentive to keep people out of the hospital and keep them well,” he says. Medicare is offering a capitation plan under its Medicare Advantage program.

Former CMS division director Rich doesn’t think capitation alone is the answer, but a pay-for-performance system that combines Medicare’s Part A (for hospitals) and Part B (for physicians) into one paying entity might encourage more efficient delivery of care.

In July, the Commonwealth of Virginia and Sentara’s Optima Health launched COVA Connect, a public-private, regional pilot project to serve about 17,000 people in Hampton Roads. The participating state employees and family members are being asked to complete health analyses for a focus on prevention and early intervention. Similar pilot projects run through Sentara’s Medicaid HMO have shown that case management for specific diseases, such as juvenile asthma, can hold medical costs down by making sure children with asthma are taking their medications and having regular doctor visits rather than going to the emergency room for acute care.

Pay for performance
C. Burke King, president of Anthem in Virginia, agrees that guaranteed access for all has to include a strong requirement that all Americans have health insurance. “To address the underlying cost and quality, we need payment reforms that move us away from fee for service and toward a pay-for-performance model which rewards providers for high quality and effective cost of care. The government could take the lead by implementing those for Medicare,” he says.

Anthem Blue Cross Blue Shield has implemented its Quality Hospital Incentives Programs program, which paid $25 million to hospitals for implementing quality measures. “Over the years, the hospitals in our program drove a 52 percent reduction in the complication rate in angioplasty.” King says. “As those go down, costs go down.”

Anthem, Virginia’s largest health insurer, believes that if all Virginians are required to have insurance, the company could level the premium playing field for healthy patients and those with pre-existing conditions. “There would need to be a meaningful financial penalty [for non-compliance], and it would have to be a program that monitors compliance at multiple checkpoints. And there would need to be some subsidy to help those of lower income purchase this coverage.”

Former CMS director Rich says there are three ways to reform health care:
• incrementally, which addresses new technologies and treatments;
• the “big bang” with details;
• and the “big bang” without details.

The “big bang” with-details was the approach used by the Clinton administration more than a decade ago — and the process ground to a halt. So this current approach is what he calls the big bang without details. “What happens depends on urgency and political willpower,” he says.